ADA, Inc. currently has 20,000 shares of stock outstanding at a market value of $40 a share. The firm is currently 100% financed with equity. ADA is considering a restructuring which will include issuing $400,000 of bonds at par value with a coupon rate of 6%. What is the break-even EBIT?

a)

$12,000

b)

$24,000

c)

$36,000

d)

$48,000

e)	$60,000 Can you please show all the steps to solving the problem and explain why each step exists.